Seeking shelter

To the Editor: Jonathan Laing, in his cover story on the future of housing-finance reform (“Fannie, Freddie: On Borrowed Time,” July 29) observes that the lower loss rates of Fannie, Freddie, and the FHA, compared with the private sector, demonstrate that they were “more prudent steward[s] of the public trust.” It demonstrates no such thing.

Fannie and Freddie had the lowest cost of capital and were the most highly leveraged participants in the mortgage space, government-bestowed advantages that enabled them to acquire the best of the worst loans as they moved out on the risk curve. Their advantages also allowed them to retain a core of traditional lower-risk business.